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How Cathie Wood Let Billions Slip Away with Early NVIDIA Sale

theguru Views  

Cathie Wood has drawn attention due to claims she missed out on a nearly $723 million profit by selling all her shares last year in NVIDIA Corporation. This leading AI chip company has been consistently breaking its highest stock price.

According to American investment specialist media Benzinga, on the 31st, ARK Invest, led by Cathie Wood, began selling NVIDIA stocks in November 2022 and had completely sold off by January of the following year.

As of November 2022, the peak of NVIDIA stocks held by ARK Invest was 772,884 shares. Reflecting the highest price ($142.11) on November 9th of that year, the stake was valued at $198 million.

However, the price of NVIDIA stocks began to soar with the generative AI boom triggered by ChatGPT early last year. After surpassing $1,000 for the first time on the 23rd, following the earnings announcement, it also exceeded $1,100 for the first time on the 28th. This represents an eight-fold increase from when ARK Invest held the stocks.

Reflecting the closing price of $1139.01 on the 28th, if ARK Invest had held onto the NVIDIA stocks until now, the stake would be valued at approximately $875.6 million, which could have yielded a profit of about $767.8 million.

In a February podcast, Cathie Wood mentioned that they have been selling NVIDIA for quite some time. She explained that their belief is based on the premise that an additional ten dollars of AI software will be sold for every dollar of AI hardware sold.

She continued, “Everyone now understands that Nvidia is the key chip player. It’s created the AI age in a sense, but we do think that it has become a check the box stock. It’s surprising hugely on the high side of expectations, and we think that expectations could be getting ahead of themselves.”

Cathie Wood was born in 1955 and majored in economics at the University of Southern California. After working as an economist at Capital Group and serving as the Chief Investment Officer (CIO) at AllianceBernstein (AB) for 12 years, she founded ARK Invest in 2014.

Meanwhile, NVIDIA’s first-quarter revenue and earnings per share greatly exceeded market expectations, and sales for the second quarter (May to July) of the fiscal year are also expected to surpass Wall Street’s forecasts. NVIDIA will begin a 10-for-1 stock split next month. This stock split, the most drastic since July 2021, marks three years since the previous one.

theguru
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